Sweden's Essity sees profit jump as pandemic drives hoarding

by Reuters
Tuesday, 14 April 2020 14:12 GMT

* Preliminary Q1 core profit up 67%

* Essity has boosted output to meet demand

* Shares rise 3% (Adds detail, background)

STOCKHOLM, April 14 (Reuters) - Swedish hygiene products group Essity reported a surge in first-quarter core earnings on Tuesday after the coronavirus pandemic drove consumers to stockpile household essentials such as toilet paper.

Essity, which is due to publish full quarterly results on April 23, said already last month it had lifted its output to beyond normal full capacity to cope with higher demand across all its markets for hygiene products.

The company said in a statement that operating profit before amortisation and items affecting comparability jumped 67% from a year earlier to 5.33 billion crowns ($535.6 million) on the back of a 10% increase in sales to 33.7 billion.

"The COVID-19 pandemic has resulted in a sharp increase in sales in many markets for Consumer Tissue, Incontinence Products, Baby Care, Feminine Care and Professional Hygiene as a result of hoarding among consumers and distributors," it said.

In March alone, organic sales growth, which strips out the impact of acquisitions and divestments, reached 20% with the three divisions Personal Care, Consumer Tissue and Professional Hygiene recording increases of 17%, 20% and 25% respectively.

"Sales in future quarters may be adversely impacted by the hoarding seen in March and sales in Professional Hygiene may also be negatively impacted by reduced travel, fewer restaurant visits and more people working from home," Essity cautioned, adding it had a solid funding situation.

The rival to Procter & Gamble and Kimberly-Clark is the global leader in hygiene products for businesses under the Tork brand, and in incontinence products with TENA.

It is the world's second-biggest maker of consumer tissue such as toilet paper and handkerchiefs under a wide range of brands such as Lotus, Edet, Tempo and Vinda.

Analysts at Credit Suisse said in a note to clients the preliminary results were a "slight positive". Essity's shares rose 2.7% at 1348 GMT. ($1 = 9.9512 Swedish crowns)

(Reporting by Anna Ringstrom; editing by Niklas Pollard)

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